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Gasoline gains as reports of refinery shutdowns signal shortage Filed: 03/23/2000
By Josh P. Hamilton c.2000 Bloomberg News
New York, March 22 (Bloomberg) Gasoline rose more than 3 percent on concern that disruptions at U.S. refineries may lead to summer shortages.
A 90,000-barrel-a-day gasoline-making unit at Exxon Mobil Corp.'s Baytown refinery in Texas, shut since March 2, may not return to production as soon as anticipated because of an unspecified problem at an adjoining unit, traders said. There also was speculation about disruptions at a Tosco Corp. refinery in New Jersey.
"Having the refinery rumor mill turning is bullish" for gasoline prices, said Tim Evans, senior energy analyst at IFR Pegasus in New York.
Gasoline for April delivery on the New York Mercantile Exchange rose as much as 3.15 cents, or 3.5 percent, to 92.60 cents a gallon. Prices are up 33 percent so far this year. Gasoline futures represent wholesale, not retail prices.
Heating oil for April delivery rose as much as 3.49 cents, or 5.1 percent, to 72.25 cents a gallon, the biggest one-day gain since Feb. 25. Prices are up 69 percent in the past year, though they're down about 28 percent from a nine-year high of $1 a gallon on Jan. 31.
A 144,000-barrel-a-day unit in Tosco's Bayway refinery in Linden, New Jersey, which serves markets in the Northeast, was operating at 70 percent to 75 percent of its capacity, Bridge News reported, citing unnamed sources.
U.S. gasoline supplies are 23 million barrels, or 10 percent, below year-ago levels, the American Petroleum Institute reported late yesterday. Refineries normally crank up output this time of year to make enough of the motor fuel for the peak summer driving season.
The Energy Department has cautioned that with inventories low, refineries will need to operate at close to maximum rates this summer to make enough gasoline.
Crude Oil Steady
Crude oil prices were little changed as oil ministers prepared for a meeting Monday of the Organization of Petroleum Exporting Countries, where they will set production targets for the months ahead.
Crude oil for May delivery was recently 7 cents higher at $27.88 a barrel on the New York Mercantile Exchange. Prices are up about 80 percent from year-ago levels.
In London, Brent crude oil for May settlement recently was up 10 cents at $25.82 a barrel on the International Petroleum Exchange.
OPEC's current production agreement expires on March 31 and while most ministers say they'll vote to boost output at the meeting in Vienna, some traders say the final amount won't be enough to meet demand from industrialized nations.
U.S. crude oil inventories rose a larger-than-expected 4.7 million barrels last week to 290.97 million, according to the API. Supplies still were down 14 percent from a year earlier. The U.S. Energy Department this morning estimated crude oil stockpiles rose 1.7 million barrels last week.
"For the time being the API/DOE influence is negligible because the major traders are fixated on OPEC," said Nauman Barakat, vice president of global energy trading at ABN Amro Inc. in New York.
OPEC, which produces two of every five barrels of oil, has come under pressure from the U.S. and other consumers to raise output next month enough to them to rebuild inventories that ended last year at the lowest levels in a decade.
Last March, OPEC agreed to make 4.32 million barrels of daily output cuts to wipe out a worldwide glut that had sent prices to 12-year lows in December 1998. Reduced supply caused prices to soar to a nine-year high of $34.37 a barrel March 8, before falling back on expectations OPEC would raise production.
-- Martin Thompson (firstname.lastname@example.org), March 24, 2000